GABORONE, March 7 (Reuters) - Minergy Ltd stopped production at its Masama coal mine in Botswana after a mining contractor halted operations due to overdue payments, the company said on Tuesday, blaming weakening coal prices for its operational problems.

Minergy said coal prices had dropped by at least 33% since mid December, resulting in the company reducing operations at Masama in order to contain costs.

“The mining contractor notified Minergy Coal that it will curtail operations as it seeks clarity on overdue payments and operational issues arising from consequences of the reduced sales," Minergy said in a statement.

It said while some operations, such as sales of stockpiles, would continue with the contractor’s assistance, "mining operations have currently stopped and will be resumed in line with demand and price.”

Strong demand, especially from Europe where Russia's invasion of Ukraine escalated an energy crisis, drove Minergy’s exports up 53% in the six months to December 2022, helping the company to ramp up output and repay some of its debts.

But the downturn in prices had now impacted earnings, Minergy said.

Botswana moved to position itself as a key coal producer, taking advantage of the surge in demand last year and increased seaborne exports in 2022 through Mozambique's Maputo port and Walvis Bay in Namibia.

Minergy has, however, said rail transport through Mozambique is uneconomical and prefers the Walvis Bay port. Botswana does not have a rail connection to Namibia, so its coal exports through that route are transported by road, which has less capacity and is more expensive than rail.

In November, Namibia’s state-owned railway company TransNamib said it planned to shift coal exports from Botswana off the road and onto rail by early this year. (Reporting by Brian Benza; Editing by Nelson Banya and Mark Potter)